jeewee3000
Active Member
Am going to try something today to save CC's.
Last friday my 200cc's expired worhtless, and those were the bulk of my CC position for the week. Fortunately.
I had some lower cc's that I had to roll. They are now 4x 195 cc's for this week and 1x 180cc for next week.
Since P&D is likely to take us up, and that hurts my cc's, I was thinking of alternatives to "just wait and roll".
Some principles that I believe are true (please correct me if false):
1) having multiple higher strike (say ATM) cc's instead of one DITM cc generally means you have higher negative delta so an increase in SP hurts you more with multiple ATM cc's.
2) negative delta is lower for a similar SP rise the further out the expiration date is.
So I'm thinking - if one believes the SP will rise - to bundle all ITM cc's into one "LEAP cc" to minimize negative delta during the runup. Then when I believe SP is close to a top, I pull the LEAP cc forward and split it up ATM, to maximize theta decay and delta during a drop.
I know this requires timing the market, but just avoiding some part of a runup will minimize the unrealised losses from ITM cc's if I theorize this correctly.
So for example I can close all the above cc's (value around $43.xx in total) and sell one JUN2026 -250c (@47.xx currently) for a credit. I then wait out the storm (NOT selling additional calls in the meantime, that would defeat the purpose of my saving-strategy) and when I see a top I close the JUN2026 -250c and split it up into closeby ATM cc's.
Of course if P&D results in a crash I am better off just holding my current ITM cc's. But that's just a risk-reward contemplation.
NFA.
#talkmeoutofitifyouseeflaws,please
Last friday my 200cc's expired worhtless, and those were the bulk of my CC position for the week. Fortunately.
I had some lower cc's that I had to roll. They are now 4x 195 cc's for this week and 1x 180cc for next week.
Since P&D is likely to take us up, and that hurts my cc's, I was thinking of alternatives to "just wait and roll".
Some principles that I believe are true (please correct me if false):
1) having multiple higher strike (say ATM) cc's instead of one DITM cc generally means you have higher negative delta so an increase in SP hurts you more with multiple ATM cc's.
2) negative delta is lower for a similar SP rise the further out the expiration date is.
So I'm thinking - if one believes the SP will rise - to bundle all ITM cc's into one "LEAP cc" to minimize negative delta during the runup. Then when I believe SP is close to a top, I pull the LEAP cc forward and split it up ATM, to maximize theta decay and delta during a drop.
I know this requires timing the market, but just avoiding some part of a runup will minimize the unrealised losses from ITM cc's if I theorize this correctly.
So for example I can close all the above cc's (value around $43.xx in total) and sell one JUN2026 -250c (@47.xx currently) for a credit. I then wait out the storm (NOT selling additional calls in the meantime, that would defeat the purpose of my saving-strategy) and when I see a top I close the JUN2026 -250c and split it up into closeby ATM cc's.
Of course if P&D results in a crash I am better off just holding my current ITM cc's. But that's just a risk-reward contemplation.
NFA.
#talkmeoutofitifyouseeflaws,please
